Alexandra Sutton v. Minister of National Revenue, [1978] CTC 2863, [1978] DTC 1650

The Chairman:—The appeal of Alexandra Sutton from an assessment dated June 14, 1976, in respect of the 1975 taxation year was heard in Toronto.

In her income tax return for that year the appellant deducted $1,644 as an equivalent-to-married exemption. The Minister disallowed the deduction of $1,644, but allowed a deduction of $352 for a wholly- dependent child under the age of 16 years.

Summary of Facts -

The appellant, represented by her present husband John Sutton, a barrister, was previously married in 1953 from which marriage there issued three children presently aged 15, 17 and 22. In 1971 the appellant divorced and the appellant’s ex-husband paid to the appellant, pursuant to a court” order, $80 per month per child. The appellant owns her own home, pays the mortgage and maintains the property. Her 1975 income tax return indicated earned income of $7,154.09.

In the autumn of 1974 the appellant married Mr John Sutton who lives in the appellant’s home. Mr Sutton stated that he earned $12,000 a year, but paid only $50 per month to the appellant for his keep. The appellant and her husband filed separate tax returns with the Department of National Revenue in 1975.

It would appear from the notice of appeal and argument made by Mr Sutton that the equity of the pertinent sections of the Income Tax Act is being questioned. It is claimed that had the appellant not remarried, but lived in common-law with Mr Sutton, she would have been able to claim an equivalent-to-married exemption and penalizing her for marrying cannot have been Parliament’s intention in drafting section 109 of the Income Tax Act, SC 1970-71-72, c 63, as amended.

Counsel for the appellant referred to subsection 109(4) of the Income Tax Act which reads:

(4) Where a taxpayer is entitled to a deduction in computing his income for a taxation year under paragraph 60(b) or (c) in respect of a payment for the maintenance of a spouse or child, the spouse or child shall, for the purposes of this section, be deemed not to be the spouse or child of the taxpayer.

I fail to see how subsection 109(4), which may apply to the appellant’s ex-husband, can be applied or indeed be of any relief to the appellant who receives the payments for the maintenance of her children. The purpose of that subsection is to ensure that the appellant’s ex-husband, whose maintenance payments are deductible, does not claim other deductions in respect of the children. In my opinion subsection 109(4) of the Act has no bearing whatever on the facts of this appeal.

The appellant cannot deduct $1,644 as an equivalent-to-married exemption because in 1975 the appellant was married and lived with her spouse, albeit not the father of the children. Her civil status was no longer single, divorced, separated or widowed as is specifically set out in schedule 6 of the individual income tax returns. The fact that the appellant and her husband filed separate returns does not make them less married and is immaterial to the issue.

Paragraph 109(1)(b) of the Income Tax Act must be interpreted restrictively and the appellant, in the circumstances not meeting the requirement of that section of the Act, the Minister of National Revenue in my view properly disallowed the deduction of $1,644 under that section. Paragraph 109(1 )(a) of the Act does not apply either because the evidence is that the appellant did not support her spouse.

In his assessment, as I understand it, the Minister of National Revenue allowed a deduction of $352 for one wholly-dependent person pursuant to paragraph 109(1)(d) of the. Act. Although paragraph 109(1)(b) does not permit a deduction for more than one wholly-dependent person that restriction does not apply to paragraph 109(1)(d) which the Minister applied in the instant appeal.

It would appear to me therefore that a deduction should have been allowed for each of the appellant’s three children who were wholly dependent on her for support in 1975 pursuant to paragraph 109(1)(d) of the Income Tax Act.

I fail to see the appellant’s allegation that the application of section 109, which attempts to bring fiscal relief in all possible circumstances, is inherently inequitable. However, even if it were, which I do not admit, only Parliament has the authority to amend the Income Tax Act. The Board must apply the sections of the Act as they are presently.

In this appeal paragraph 109(1 )(b) of the Income Tax Act, upon which the appellant relied, is clearly not applicable to the facts of this appeal, but paragraph 109(1)(d) is wholly applicable.

For these reasons the appeal is allowed on the basis that deductions should be considered for each of the appellant’s children who meet th requirements of paragraph 109(1 )(d) of the Act if this has not already been done, and the matter is referred back to the respondent for reconsideration and reassessment accordingly.

In all other respects the appeal is dismissed.

Appeal allowed in part.